A request for payment on account of costs need not be made at the hearing, and can be sought before the order is sealed, Chancery Master Matthews ruled this week.
In Ashman v Thomas [2016] EWHC 1810 (Ch), the master gave judgment on preliminary issues and awarded costs to the defendant. In seeking to agree the terms of the order, counsel for the defendant sought to include a term for a payment on account of costs, which was opposed by the claimant.
CPR rule 44.2(8) provides: “Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.”
The claimant said a payment on account should be sought at the time that the costs order was made, or alternatively that an interim costs certificate may be issued at any time after the commencement of the detailed assessment process, under CPR 44.16(1). It also said it was “inappropriate” to deal with the matter by way of written submissions, and that in any event no costs schedule was served 24 hours before the hearing, in breach of paragraph 9.5(4)(b) of PD 44.
Master Matthews said: “For myself, I do not think that a payment on account cannot be sought by written submissions in an appropriate case. Frequently, costs questions arising at the end of a hearing are left over to be dealt with in this way. Nor is the failure to serve a costs schedule 24 hours before the hearing an objection, fatal or otherwise. The whole of para 9.5 of PD 44 is, as para 9.5(1) makes clear, concerned with summary and not detailed assessment of costs.
“The substantial point, as it seems to me, is whether a request for a payment on account can only be made at the hearing itself. If so, then, once the parties come to draw up the order for the court’s approval, it is too late to argue for its inclusion.
“The general rule is that an order takes effect from the moment it is made by the court, not when it is entered and sealed by the court office… But the court retains power to alter its judgment or order at any time until it is entered and perfected by sealing…
“There is nothing in the rules, nor any case of which I am aware, to alter the general rule in the context of payments on account of costs. Indeed, the mandatory terms of CPR rule 44.2(8) (subject to the existence of a ‘good reason’) mean that there is even more reason to exercise the power when the matter is drawn to the court’s attention than there might otherwise be.
“Accordingly, I conclude that there is no objection in principle to considering the defendant’s request for a payment on account of costs, and indeed good reason to do so, when this is sought after the hearing but before the order is sealed. I shall therefore do so.”
The costs claimed were £48,647.70 (including VAT) and the defendant asks for an order that £20,000 be paid on account within 14 days.
The claimant criticised the rates claimed as beyond the guidelines. The master noted that all the work appeared to have been carried out by grade A fee-earners and there had been no delegation.
“The solicitors’ total profit costs claimed are £27,349.75. There are significant hours recorded as having been spent. It should have been possible to delegate some of the work to less expensive fee-earners. It is not an answer (if it be the case) that the firm has no other fee-earners available. The paying party should not be asked to pay more than is reasonable and proportionate. I have no comment on the various counsels’ fees.
“In my judgment, this is a case where a payment on account of costs is justified. But, given the criticisms made of excessive rates, excessive hours and lack of delegation, it would not be safe to order a payment of £20,000. I will therefore order that £17,500 be paid on account of costs within 14 days.”